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A Pakistani miner. China will invest $1.95 billion in Pakistan coal mines at a time when it is... [+] shutting coal mines back home. (Photo by BANARAS KHAN/AFP/Getty Images)

Call it "do as I say, not as I do." While China is ditching coal back home, it is spending $1.95 billion to develop a coal mine and a coal fired power plant in Pakistan. The development deal is part of China's new and ambitious Eurasian project known as One Belt One Road.

Pakistan and China signed financing agreements on Friday for the development of the Thar Block II 3.8 million tons per year coal mine and its associated coal-fired power plant, set to be up and running in two years.

The sponsors of the mining project include the Pakistani-based Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited and China's Machinery Engineering Corporation, or CMEC. CMEC is the construction contractor for the projects. The deal did not say whether or not Chinese labor was required.

China has shuttered hundreds of coal mines over the last 12 months in an effort to fight massive environmental damage and air pollution in its principal cities. Poor air quality has become a health hazard that Chinese authorities can no longer ignore. Last year's documentary titled Under the Dome did for China's fossil fuel industry what Al Gore's Inconvenient Truth did to climate change. It created a mass, popular movement, back by the medical community in China, to clean the air.

Burning coal for energy is one of the main drivers of human-induced climate change, scientists say. The coal at Tharparkar in south Pakistan, where this project is taking place, is mainly lignite – one of the least energy-intensive and most polluting types of coal.

The problem with Pakistan is that it has no source of cheap energy. Coal is it. And this is a poor country where some 20% live on less than $2 per day. By comparison, China is filthy rich. For clean tech and clean air aficionados, China might be doing Pakistan a favor if it installed solar panels there instead. China is the world's leading manufacturer of photovoltaic panels. And its industry is currently facing serious oversupply since Europe stopped mandating increases in solar energy. Solar panels aren't cheap. And they don't employ a lot of low skilled labor. So poor countries are left with this instead.

Meanwhile, the energy produced by the China-funded power plant will help alleviate serious power shortages in the capital city of Karachi, Pakistan’s main industrial center.

Zhang Chun, president of CMEC, said this is the first integrated coal mining and coal-based power project among the projects in the China-Pakistan Silk Road initiative.

China will shut down more than 1,000 coal mines in Guizhou, Yunnan, Heilongjiang and Jiangxi provinces over the next three years, the State Administration of Work Safety said in January.

Huang Yuzhi, deputy director of the Administration, the country's top safety regulator, said China will continue its efforts to reduce outdated coal capacity this year.

"More than 1,300 coal mines were closed last year, and small coal mines with a scale of annual production of less than 300,000 tons that had major accidents will be gradually closed this year, as well as those mines that are operating illegally," Huang said.

China has a whopping 9,624 coal mines. China is far and away the largest coal consumer. It plans to stop approving new coal mines over the next three years.

I've spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big

…

I've spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes.
My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn't follow the herd.